A federal judge gave his final approval Thursday (Sept. 27) to a $42.6 million class-action settlement between companies that made and installed government-issued trailers after hurricanes in 2005 and Gulf Coast storm victims who claim they were exposed to hazardous fumes while living in the shelters.

The Associated Press reported that U.S. District Judge Kurt Engelhardt ruled from the bench after hearing from attorneys who brokered a deal resolving nearly all remaining court claims over elevated levels of formaldehyde in trailers provided by the Federal Emergency Management Agency (FEMA) following hurricanes Katrina and Rita.

Roughly 55,000 residents of Louisiana, Mississippi, Alabama and Texas will be eligible for shares of $37.5 million paid by more than two dozen manufacturers. They also can get shares of a separate $5.1 million settlement with FEMA contractors that installed and maintained the units.

Gerald Meunier, a lead plaintiffs’ attorney, said the deal provides residents with “somewhat modest” compensation but allows both sides to avoid the expense and risks of protracted litigation.

“Dollar amounts alone do not determine whether a settlement is fair and reasonable,” he said.

Jim Percy, a lawyer for the trailer makers, said Engelhardt would have had to try cases individually or transfer suits to other jurisdictions if the settlement wasn’t reached.

“It was not going to end quickly, and it was going to be even more monumental for all the parties concerned,” he said.

Formaldehyde, a chemical commonly found in building materials, can cause breathing problems and is classified as a carcinogen. Government tests on hundreds of trailers in Louisiana and Mississippi found formaldehyde levels that were, on average, about five times what people are exposed to in most modern homes.

FEMA isn’t a party to the settlements and had downplayed formaldehyde risks for months before those test results were announced in February 2008. As early as 2006, trailer occupants began reporting headaches, nosebleeds and difficulty breathing.

Only three plaintiffs have opted out of the settlement with the trailer makers. Engelhardt opened the floor to objections during Thursday’s hearing, but nobody spoke up. The judge said he didn’t receive any formal, written objections, either.

Engelhardt presided over three trials for claims against FEMA trailer manufacturers and installers after he was picked in 2007 to oversee hundreds of consolidated lawsuits. The juries in all three trials sided with the companies and didn’t award any damages.

Plaintiffs’ lawyers have accused the trailer makers of using shoddy building materials and methods in a rush to meet FEMA’s unprecedented demand for temporary housing.

Meunier, however, said it was difficult for plaintiffs’ attorneys to prove a link between formaldehyde exposure and residents’ health problems because many trailers couldn’t be tested until months or even years after the fact. Many residents never sought treatment for their symptoms, he added.

“It was both challenging in the legal and factual sense,” he said.

A group of companies that includes Gulf Stream Coach Inc., Forest River Inc., Vanguard LLC and Monaco Coach Corp. will pay $20 million of the $37.5 million settlement with the trailer makers.

Shaw Environmental Inc., Bechtel Corp., Fluor Enterprises Inc. and CH2M Hill Constructors Inc. are among the FEMA contractors that agreed to pay shares of the separate $5.1 million settlement.

Only a handful of formaldehyde-related claims are still pending, including those against FEMA by a group of Texas residents.

The Federal Emergency Management Agency (FEMA) says the last Katrina trailer is now out of the city of New Orleans.

“Another page has turned in New Orleans’ post-Katrina history,” New Orleans Mayor Mitch Landrieu said in a news release. “At the end of the day, FEMA trailers were never meant to be permanent housing units, so I’m glad that our code enforcement efforts coupled with FEMA case work has helped individuals transition to permanent housing.”

The mayor says they have moved 230 FEMA trailers out over the past 14 months.

“For more than six years, temporary housing units were located on private properties, group and industrial sites, and in commercial mobile home/RV parks across New Orleans while the residents recovered from the devastating effects of Hurricane Katrina,” said FEMA’s Louisiana Recovery Office Deputy Director of Programs Andre Cadogan. “The transition of this final household is a huge success for our agency, the state, the city, local nonprofits, and all others who contributed to helping return normalcy to New Orleans and those who live here.”

Officials say crews removed the last trailer Sunday after the final family moved into a rebuilt home last week.

The trailers were part of what FEMA calls “the largest housing operation in the history of the country.”

In response to Hurricanes Katrina and Rita, FEMA moved approximately 92,000 families throughout Louisiana into travel trailers, mobile homes and park models.

The agency notes that FEMA has provided approximately $5.8 billion to assist 915,884 individuals and families in Louisiana for hurricanes Katrina and Rita, including $4.2 billion in housing assistance for rent, repairs and replacement housing and $1.6 billion in other needs assistance for such things as furniture, clothing and replacement vehicles.

Mississippi and Alabama residents cannot sue the U.S. government over emergency trailers that the Federal Emergency Management Agency (FEMA) provided when Hurricane Katrina made thousands of homes uninhabitable, the 5th Circuit ruled.

Courthouse News Service reported that agreeing with the August 2010 decision of a federal judge, the federal appeals court said the plaintiffs, representing 10,000 residents, lack subject-matter jurisdiction to sue since FEMA provided the trailers at no cost to residents and under no obligation.

In 2005 hurricanes Katrina and Rita destroyed hundreds of thousands of homes along the Gulf Coast. The Federal Emergency Management Agency contracted private businesses to immediately construct and provide thousands of travel trailers to give residents as temporary shelter until other housing became available.

FEMA trailers were available at no cost to residents for use as temporary emergency housing from September 2005 until May 2009. Applications for receiving the trailers notified residents that the units were intended for temporary use and that applicants were required to accept alternative housing options as they became available.

Seven months in, FEMA began receiving complaints from trailer occupants about formaldehyde odors inside the units. Formaldehyde is a chemical substance commonly found in construction materials such as plywood, particle board, home furnishing and fabrics. The Environmental Protection Agency (EPA) classifies it as a probable human carcinogen.

FEMA notified these early complainants to ventilate the trailers by opening the doors and windows. In June 2006, FEMA prepared an informal brochure informing trailer occupants of the dangers of formaldehyde exposure, encouraging them to ventilate their units and urging them to seek medical help if they developed health problems related to formaldehyde.

It began working with the EPA on the issue in September 2006, with more than 200 occupants had complained to FEMA about formaldehyde by the end of the year. After lawsuits over the substance began accumulating, the U.S. Judicial Panel on Multidistrict Litigation consolidated all the cases and assigned the matter to Louisiana’s Eastern District.

Hard times are hardly new in Pass Christian, Miss., but four years after Hurricane Katrina tore this area apart, Ritamarie Northrop still calls a FEMA travel trailer home. And she’s one of about 2,100 Gulf Coast families suffering the very same fate, as CBS News chief investigative correspondent Armen Keteyianreported recently.

“I gave up on FEMA,” Northrop said. “You know, I could have appealed, appealed, appealed. I gave up.”

At the height of the recovery, 143,000 families in Louisiana and Mississippi found refuge from the storm in such trailers. Now two years after FEMA began moving people out of the trailers, case workers tell CBS News the thousands left in the trailers aren’t trying to beat the system; they are victims of a system that’s proved incapable of helping them get out.

Just ask Kendall Deschamp.

“Oh it’s miserable,” he said of living in the trailer. “Bottom line: it’s miserable.”

A disabled state highway worker, Deschamp collects just $1,368 a month in benefits. That’s not enough, he says, to afford the sheetrock and new hot water heater he needs for the permit allowing him to move back into his four-bedroom home, which stands just a few tantalizing feet away.

What would he need to get the job of repairing his old home done, top to bottom?

Deschamp says he called FEMA countless times for assistance, only to get an endless game of bureaucratic run-around that has beaten him down.

“They give me the same answers: ‘You need to call this person.’ I call this person and they tell me I need to call this person.”

Kandy Moran, a state social worker, says all she needs is a bit more time — and money — to fix her home. FEMA’s answer: A threat of eviction or temporary housing in the next county.

“My grandparents gave us this property,” Moran said. “So when FEMA approaches me and says, ‘Kandy, we can put you in a rental.’ — I can’t leave my home.”

Today the remaining travel trailers serve as a symbol of a recovery gone wrong: A hurricane of empty promises, chaos and coverup; a system that remains in the words of one FEMA worker on the ground in Mississippi, “One big, disgusting mess.”

CSB News wanted to ask FEMA about what’s being done for folks like this. But FEMA told us to call another federal agency, Housing and Urban Development, saying that, as of June, HUD had taken over long-term housing of disaster victims.

“We’re working with the state to remove all the bureaucratic red tape to make sure that those final families can be serviced by those programs as well,” HUD Senior Adviser Fred Tombar told CBS News

Yet so many of those final families say the last thing they want is another program. Rather, they want someone to actually listen, to offer the help they really need, and to close the doors on their trailers once and for all.

Sixty-six people in Alabama’s Mobile County filed federal lawsuits on Tuesday (June 30) against the manufacturers of travel trailers that they say exposed them to dangerous levels of formaldehyde after Hurricane Katrina.

The lawsuits join about 23,000 others that have been filed in Mississippi, Louisiana and Texas. The Alabama suits name seven manufacturers, along with contractors who won no-bid contracts to install the trailers, according to the Mobile Press-Register.

The suits filed Tuesday — along with another 40-plus civil complaints that attorneys plan to file by Aug. 1 — will be transferred to a federal judge in New Orleans who has been appointed to oversee all of the travel trailer litigation along the Gulf Coast.